Short term risks and uncertainty factors

Biohit’s key risks are related to the success of the selection and development of new market areas and distribution channels, product registrations and personnel recruitment. Significant short-term risks are associated with the success of product registration and successful selection of correct distribution channels. The recent increase in uncertainty factors associated with international politics may have an unfavourable impact on the company’s business, examples include the Middle-East and Brexit. Spreading of coronavirus (2019-nCoV) might impact negatively on our business in China.

The duration of the product registration process is different in each market area. For this reason, it is not possible to accurately assess the time taken for the authorities to handle registrations and for product sales to begin. The distributor is responsible for the registration process.

When investing liquid assets, the objective is to gain a return on investment with a minimum risk of equity loss. The investment portfolio consists of deposits, money market investments and corporate loans. A fundamental aspect in portfolio management is sufficient diversification across different asset classes, investment instruments and counterparties. The investment portfolio is subject to interest rate risk, which is managed by adjusting the duration of the portfolio. The rise of one percentage point in interest rates would have a negative impact of EUR 0.1 million on the fair value of the investment portfolio.

The Group’s investment in Genetic Analysis AS unlisted shares is subject to changes in the terms of transactions involving the company’s shares that take place between third parties. A negative change of 30% in the valuation of Genetic Analysis AS shares, would have a negative pre-tax impact of EUR 1.2 million on the Group comprehensive income. Investment in Genetic Analysis AS is also subject to changes in euro/NOK foreign exchange rate. In addition Genetic Analysis AS is dependent on securing external financing in its operations. Genetic Analysis AS valuation changes have no effect on company’s cash flow.

Biohit’s customer base is widely diversified, with the exception of GastroPanel® sales in China, which currently represents a major single business for Biohit. For this reason, the company is dependent on the continuation of this business relationship in China. Otherwise, the company is not significantly dependent on individual customers or project deliveries. Most of the company’s business is conducted in euro, and the indirect effects of currency exchange rate fluctuations are considered insignificant.